If it's fizz you are after on Wednesday, look to Britvic rather than the Fed

By John Harrington / January 30, 2018 / www.proactiveinvestors.co.uk / Article Link

The spate of Christmas trading updates from the retailers has dried up so attention switches to macroeconomic events, specifically US interest rates.

Having said that, the first Federal Reserve policy meeting of 2018 is expected to be one of the more uneventful Federal Open Market Committee (FOMC) meetings in some time.

The likelihood of a hike on Wednesday evening is near zero, and the fact that there is no press conference or update to economic projections means only the statement will be in focus.

Commentators think there will be important tweaks that could make this statement much more hawkish than the December version, with the economic assessment to get a slight mark-up from an already robust characterisation.

The wild card is also that the Fed committee could acknowledge some shift in the balance of risks following the recent US tax cuts as the economy is going from strength to strength.

Economists at ING are currently forecasting no US rate hike in the first quarter of 2018 as near-term activity data may be somewhat soft given bad weather in January and core inflation is likely to remain below 2% through to April.

As such, they added, incoming Federal Reserve Chair Jay Powell may choose to wait until the outlook is clearer before triggering consecutive hikes in Q2, Q3 and Q4.

On the corporate front, drinks maker Britvic has done all right for itself since the competition authorities put the mockers on the planned takeover by smaller rival AG Barr, the maker of Irn Bru.

At the time of the mooted merger, the company was looking like a lame duck but despite the impending introduction of a sugar tax and the success of Fever-Tree in the mixers market, Britvic's share price has been decidedly perky - up by a third over the last year and three-quarters over the last five years.

Organic revenue growth in the year to the end of September was 2.5%, and the group highlighted that more than two-fifths of revenue is now earned outside of the UK.

The company is into the third year of its business capability programme - a restructuring, by any other name - and recently increased its guidance of cost benefits from the programme.

Shareholders will be interested to learn what plans the company has for expansion now it appears to have set its house in order.

Significant announcements expected

Trading updates: Britvic Plc (Q1) (LON:BVIC), SSE plc (Q3) (LON:SSE), Wizz Air PLC (Q3)

Interims: ANGLE PLC (LON:AGL), Best of the Best plc (LON:BOTB); Joules Group PLC (LON:JOUL)

Finals: Centamin PLC (LON:CEY)

Economic data: US FOMC meeting outcome; BRC UK shop price data; UK international trade in services; US ADP employment report

 

 

 

 

 

 

 

 

 

 

 

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